Government to step in to resolve Deposit Protection ambiguity

Government to step in to resolve Deposit Protection ambiguity

9:44 AM, 20th June 2014, About 10 years ago 26

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At last it seems that common sense will prevail in Westminster. Government to step in to resolve Deposit Protection Ambiquity

Last year the Court of Appeal ruled (in the case of Manual Rodriguez vs Superstrike Limited) that statutory periodic tenancies are indeed new tenancies . This cast a shadow over interpretation of the law and whether or not new deposit protection prescribed information needs to be served when a fixed term tenancy ends and automatically rolls over to being a statutory periodic tenancy.

This ambiguity resulted in a state of panic for landlords and letting agents and sent their representative bodies into a spin given that consensus of opinion and most associated advice was that once a deposit was protected that was all that was required. The Superstrike case cast doubt over whether a tenant could claim compensation equal to the deposit plus three times the deposit for failing to serve prescribed information again within 30 days of a tenancy becoming a statutory periodic tenancy.

Ministers acknowledged the issue relatively quickly and agreed that the drafting of the legislation upon which the Court of Appeal had ruled was indeed ambiguous and not as intended, hence they committed to legislating to correct the situation 

Much of the progress of the Deregulation Bill through parliament has already taken place and while the amendments will first need to be agreed by both Houses it is unlikely to meet too much resistance.

If passed, the changes in legislation will mean that all landlords with tenancies that commenced post April 2007 and which were originally compliant with deposit protection legislation will be deemed to have complied.

A 90 day amnesty is proposed for landlords who have tenancies commencing pre April 2007, and which have become periodic and for which a deposit is still held, following commencement of the legislation in order to protect the deposit and serve the appropriate prescribed information.

For all tenancies that have ceased or where a deposit is no-longer held, it is proposed that landlords will be deemed to have complied.

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Comments

Mike Goldsmith

12:37 PM, 21st June 2014, About 10 years ago

I agree with Alex . I have 30 odd houses and do not take deposits anymore . To me it takes up too much time & effort . The good tenant's will always give you the correct notice time & leave your property in a good condition . The bad tenants will always leave owing you money and lots of damage . I had one leave a 3 bedroom house this year without telling me ,owing 2 months rent & he took all the white goods and even the carpets "yes the carpets" . He had been a perfect tenant for 8 years always paid his rent on time but then just went feral . I did have a deposit from him but it didn't stop him wrecking the place .

DC

12:55 PM, 21st June 2014, About 10 years ago

Reply to the comment left by "mike goldsmith" at "21/06/2014 - 12:37":

Do we take it that you reported the theft and criminal damage to the police or were you happy to write this off along with all those potential 30 future non-deposit paying expenses to come?
Are you businessmen or charities?
Sorry but I just don't get it!

Romain Garcin

12:58 PM, 21st June 2014, About 10 years ago

Reply to the comment left by "DC " at "21/06/2014 - 12:34":

It is specific to Superstrike, ie. to statutory periodic ASTs. Whether the deposit had never been protected is not the key in Superstrike.

Of course this amendment does solve an issue, so that's positive. I'm saying that I'm hoping for a real re-drafting of the statute with a general simple, clear rule, instead of patches and special cases. We'll see...

I'm not a lawyer but I'm also concerned about the drafting of this amendment, which is:
"A tenancy deposit shall not be treated as being paid or received in connection with a shorthold tenancy by reason only of the deemed grant of a statutory periodic tenancy pursuant to the provisions of section 5(1) of the Housing Act 1988".

As I commented previously I'm wondering if that would not create new problems as this could be interpreted as meaning that the landlord must refund the deposit when a statutory periodic AST is created.

DC

14:46 PM, 21st June 2014, About 10 years ago

Reply to the comment left by "Romain " at "21/06/2014 - 12:58":

I'm not a Lawyer either but I've just read the full proposed amendment and I don't see where you get your interpretation from, however, as we know any legislation is open to interpretation on its day at Court.

For anyone else wishing to see the full context of the Deregulation Bill here is the link:
http://www.publications.parliament.uk/pa/bills/cbill/2013-2014/0191/amend/pbc1911405a.pdf

Perhaps others have valid opinions to contribute?

Romain Garcin

14:51 PM, 21st June 2014, About 10 years ago

Reply to the comment left by "DC " at "21/06/2014 - 14:46":

Well, if the deposit is not paid or received how can the landlord hold it? I'm thinking that this is a question that someone will ask at some point...

DC

15:04 PM, 21st June 2014, About 10 years ago

Reply to the comment left by "Romain " at "21/06/2014 - 14:51":

If the landlord never held or received a deposit then of course this amendment doesn't apply and nor does any of the deposit legislation.

If I don't own a car then I do not have to insure it under the Road Traffic Act either!

I'm sorry but I don't understand what you are trying to say.

Romain Garcin

15:08 PM, 21st June 2014, About 10 years ago

Reply to the comment left by "DC " at "21/06/2014 - 15:04":

"If the landlord never held or received a deposit then of course this amendment doesn’t apply and nor does any of the deposit legislation."

Er, I think you missed the point.

As said in my previous post, the amendment's wording is:
“A tenancy deposit shall not be treated as being paid or received in connection with a shorthold tenancy by reason only of the deemed grant of a statutory periodic tenancy pursuant to the provisions of section 5(1) of the Housing Act 1988″.

To me that begs the question: if the deposit is not deemed paid or received how can the landlord hold it?

Michael Barnes

17:14 PM, 21st June 2014, About 10 years ago

Reply to the comment left by "Romain " at "21/06/2014 - 15:08":

I was a little confused by your comments as I could not find the statement you quoted in the amendments I was looking at.
I then followed the link above and found that it was to 14 May amendments whereas I was looking at 16 June amendments (at http://www.publications.parliament.uk/pa/bills/cbill/2014-2015/0005/amend/pbc0051606a.141-147.html).

I think that the earlier amendments have been superseded by the 16 June amendments and that the 16 June amendments are government-sponsored and therefore better drafted than the 14 May amendments; they are certainly more comprehensive and more clear (to me).

Michael Barnes

17:32 PM, 21st June 2014, About 10 years ago

My interpretation of the 16 June amendments is

1. For tenancies starting after 5 April 2007, provided we complied with the law for deposit protection and prescribed information for the fixed term tenancy then we do not have to reserve PI when the tenancy becomes statutory periodic; AND that will be retrospective except where the case has already been determined.

2. Same conditions as 1, but a new fixed term tenancy is granted, then same effect (ie we do not have to reserve PI when the tenancy becomes statutory periodic; AND that will be retrospective except where the case has already been determined).

3. Superstrike conditions (deposit taken before 6 April 2007; becomes statutory periodic after 5 April 2007) then provided that the deposit is properly protected within 90 days of the Act becoming law, then landlords will not be considered to be in breach of the deposit protection laws, AND that will be retrospective except where the case has already been determined).

4. Deposits taken before 6 April 2007 and tenancy became statutory periodic before 6 April 2007, then deposit does not have to be protected.

Mark Alexander - Founder of Property118

18:42 PM, 21st June 2014, About 10 years ago

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